As many of you know, something we’ve been working on internally is using various 'bottoms-up' tools and scans to complement our top-down approach. It's really been working for us!
One way we’re doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small, to mid, to large - and ultimately mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table you will notice we are only focused on technology and growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc.
Then like any good technician, we filter the list down to those that are closest to new highs. This allows the cream of these strong groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
Despite the most recent bout of selling pressure, Growth, Tech, and the Nasdaq are still trading just points away from their all-time highs.
Our overall position is cautionary as evidence continues to be mixed and we think markets are likely to remain a mess for the foreseeable future. But! These secular growth stocks are often the best when it comes to bucking the overall trend. A mid-cap software stock with top-knotch growth prospects is going to be impacted a lot less by falling yields than more value-based, cyclical stocks.
So our 2 to 100 Club universe is on the winning side of this choppy environment as our list is comprised entirely of growth stocks which is where the relative strength has been and continues to be.
As usual, we’ve sorted this week’s list by proximity to all-time highs:
With growth making a comeback of late, many long-term leaders have broken back toward record highs and are offering some favorable risk/reward setups at current levels.
At the same time, we're certainly not in the clear yet as bulls and bears are really battling it out of late. We always want to use periods of volatility like this to identify stocks exhibiting relative strength as they are likely to be the leaders when the corrective phase passes.
So let's dive right in and check out some of these potential future leaders!
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